Posts Tagged ‘Economic Forum’

CARSON CITY – Nevada’s next two-year general fund budget would grow by $279 million to $6.46 billion based on the initial spending requests submitted by state agencies, information released today by the Budget Division shows.

State Budget Director Jeff Mohlenkamp, who will continue to piece together Gov. Brian Sandoval’s final recommended 2013-15 budget through at least December, said the increase in spending is due primarily to the growing public education and Medicaid populations. The public education piece is estimated at $18 million. The Medicaid population increase is expected to cost $104 million.

The budget is still subject to a variety of revisions by Sandoval between now and January when it is released to the public and lawmakers. The final budget will depend greatly on available tax revenue, which will be set by the state Economic Forum in early December.

“We’re wrestling quite a few different variables that all have to be factored in before ultimately those decisions are made,” Mohlenkamp said.

The agency request budget also includes the cost of expanding Medicaid to already eligible Nevada residents expected to enroll in the program because of the federal Affordable Care Act. This piece is expected to cost $86.6 million.

The budget does not include an expansion of Medicaid to a newly eligible group of Nevadans provided for under the health care law, Mohlenkamp said. Sandoval has yet to make a decision on that issue, he said.

“We have decision units prepared, that should the governor make the decision to opt in, then we can very quickly make that happen within the budget,” Mohlenkamp said.

The budget does anticipate the continuation of several tax increases that are now set to sunset on June 30, 2013. It also, for now, continues salary reductions and furloughs for state workers that would save approximately $160 million.

Sandoval has said he will consider restoring some of the reductions if general fund revenues are sufficient to do so.

“While not perfect, these agency budget requests are a concrete step toward limiting the growth of government from already inflated levels,” he said. “Besides limiting spending increases, this budget shows the power of performance-based budgeting, which focuses on providing the highest level of outcomes for every dollar spent.”

Lawrence also warned lawmakers against using any higher revenue projections from the Economic Forum to boost spending.

“Higher-than-expected revenue projections from the Economic Forum should be used to lower taxes on struggling Nevada families, instead of as an excuse to increase government spending,” he said.

Mohlenkamp said the spending numbers released today are expected to be within the general fund tax estimates set by the Economic Forum.

“We do believe that we are in the range, but we don’t know how close we are to actually what the Economic Forum will come in at,” he said. “But that’s pretty much of an unknown right now.”

The final budget will be the first to comprehensively include performance-based budgeting, Mohlenkamp said. The process is expected to make the budget more transparent so the public can easily understand where the money is being spent. It will also provide better accountability on whether the state is achieving its goals, he said.

Several major initiatives being proposed in the budget include a restructuring of the Division of Mental Health and Developmental Services, with the mental health side going to the Health Division, and the developmental services piece going to Aging and Disability Services.

“It’s a fairly major restructuring that is going on within Health and Human Services,” Mohlenkamp said.

CARSON CITY – Gov. Brian Sandoval said today that there are a large number of variables in play as he prepares his 2013-15 budget, including who wins the presidential election on Nov. 6.

Sandoval said a decision on whether to expand Nevada’s Medicaid program to cover newly eligible residents under the Affordable Care Act will wait for that result, since Gov. Mitt Romney has said he wants to repeal the law.

The state Department of Health and Human Services is preparing two different budgets to reflect one with the Medicaid expansion and one without.

“Yes, we’re looking at both scenarios,” Sandoval said.

Gov. Brian Sandoval.

“If you’ve watched the debates, which I’m sure you have, is that Gov. Romney has declared that he is going to seek to modify, if not remove, the Affordable Care Act, which obviously would have a large impact on our budgeting process,” he said.

“When we’re in the middle of a budget process we have to account for all the variables,” Sandoval said. “There are some big variables right now.”

State Budget Director Jeff Mohlenkamp said the state is also still waiting on some guidance from the federal Department of Health and Human Services before a Medicaid expansion decision can be made.

“There are several points of guidance that we’re waiting to hear from and we simply have not received that from Health and Human Services at the federal level,” Sandoval said.

Restoring state employee salary cuts remain a possibility, depending on these many factors as well as others, including an increased Medicaid caseload irrespective of the expansion allowed for under the ACA, he said. The caseload is expected to increase because of the Nevada residents who are now eligible for Medicaid but who have not enrolled. Many are expected to sign up because of the mandate in the ACA for people to obtain health insurance.

There are other factors in flux besides the Medicaid budget.

Sandoval said he is also waiting on the proposed Distributive School Account (DSA) funding request, which is the major component of the public education budget, as well as the results of the state revenue projections from the Economic Forum due in early December.

Sandoval will present his budget to the Legislature in mid-January next year.

State agencies will be presenting their budget requests to Sandoval and his budget office beginning Friday. All were directed to submit flat budgets.

“I’m hopeful that as we receive more information with regard to the DSA, with regard to the Economic Forum, with regard to what the revenues for the state, that we can restore some of the salary reductions that have occurred historically,” Sandoval said.

There was no promise to restore state employee salary cuts, only that it would be an item of consideration after all the other pieces of the budget puzzle become clear, he said.

“So right now we have one piece of the budget, which are the agency requests,” Sandoval said. “As we receive further information we’ll be able to more narrow down exactly what the future budget is going to be.”

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Audio clips:

Gov. Brian Sandoval says he has requested state agencies to submit flat budgets:

CARSON CITY – Gov. Brian Sandoval has appointed Las Vegas financial adviser Ken Wiles to the Economic Forum, a panel of mostly private citizen fiscal experts charged with making tax revenue projections for the state.

Wiles is currently a managing director at Acceleron Group, a firm that specializes in providing domestic and international companies with investment banking, private equity and strategic financial advisory services with an emphasis on restructuring and turnaround activities. Wiles is a member of the senior management team responsible for establishing the company’s strategic direction, leading business development activities and directing client engagements.

He was appointed to fill the unexpired term of John Restrepo of Las Vegas, who has resigned from the panel. The appointment lasts through Jan. 31, 2012.

The five-member panel has three appointments made by the governor, one by the Assembly speaker and one by the Senate majority leader. State law requires the forum to make projections of the revenue that will be collected by the state. The governor and Legislature must rely on Economic Forum estimates for the preparation and adoption of a balanced state budget.

“Ken’s financial and operational experience within growing organizations ranging from venture-stage companies to multi-location, publicly traded corporations will be a vital asset to the Economic Forum as Nevada continues on a path to economic recovery,” Sandoval said “From serving as a professor to working day in and day out in the financial world, Ken’s intimate knowledge of how the economy works will now benefit his fellow Nevadans.”

Prior to Acceleron, Wiles served as the chief financial officer and senior vice president of business development of AppForge Inc. where he led the company’s strategic business relationships with companies including Nokia, Microsoft, Oracle, Palm, RIM, AT&T, and Symbian, among others. In addition, Wiles was responsible for finance, accounting, investor relations, human resources and management information systems. The software firm ceased operations in March 2007.

Wiles has also been a vice president at Lloyd & Company, an investment banking firm that specialized in providing investment banking and strategic financial advisory services to middle-market companies and served as chief financial officer for SOMAR, Inc.

For a total of 17 years, Wiles was a finance professor at the Kenan Flagler Business School at The University of North Carolina at Chapel Hill and an adjunct finance professor in the executive MBA program. A published author with articles appearing in The Journal of Financial Economics, The Journal of Empirical Finance, Financial Management, and Financial Analyst Journal, Wiles was also the recipient of the MBA and undergraduate teaching awards while at Kenan Flagler.

Wiles has also held positions in liquidation accounting at the Federal Deposit Insurance Corporation (FDIC); in the accounting department at Miller and Long, Inc., one of the nation’s largest concrete subcontractors; and at Golembe Associates, a financial institutions investment banking firm.

The Economic Forum was created in 1993 with Senate Bill 23 introduced by former state Sen. Bill Raggio, R-Reno. Before then, the governor and lawmakers independently determined what the revenue estimates would be for purposes of adopting a balanced budget based on analysis from their own fiscal staff. Raggio said the proposal was intended to depoliticize the process of setting revenue estimates.

In testimony in support of the bill at the Senate Finance Committee in 1993, Raggio said: “Whether personally, or not, there is always that feeling that if we can (massage) these projections, and make them a little bigger, then we can accommodate this or that. I think that’s the problem.”

Members of the forum are paid $80 for one day of preparation for each meeting and $80 for the meeting itself. They also get the same per diem reimbursements and travel expenses provide to state employees.

CARSON CITY – Work on closing Nevada’s two-year $6 billion general fund budget will begin in earnest tomorrow after the Economic Forum today finalized its tax revenue projections for the coming two years.

But legislative Democrats and Gov. Brian Sandoval remain far apart on an acceptable spending plan even with a $218 million general fund revenue increase.

The Senate and Assembly money committees have scheduled a joint meeting Tuesday to consider the contentious public education budget now that the tax revenue picture is clear.

At a briefing after the Economic Forum completed its work, legislative Democrats said they will finalize their funding recommendations for public schools at the joint hearing at levels beyond the new forum estimates and beyond what Sandoval has proposed, setting up a showdown over the budget.

Identifying new revenues to fill any resulting funding gap remains a work in progress for Democrats, however.

Senate Majority Leader Steven Horsford, D-Las Vegas, welcomed the news of the enhanced revenue that totals about $274 million, but said it is not enough to fill all the gaps that remain in the budget.

“It is our responsibility as elected officials to lead, and our responsibility to pass a budget that meets our obligations to our students, seniors and to all Nevadans,” he said. “The governor’s budged did not do that yesterday and it does not do that today.”

Other Democrats agreed.

“That’s simply not acceptable,” Assembly Ways and Means Chairwoman Debbie Smith, D-Sparks, said of the level of funding in the public schools budget. “So tomorrow, we will move to close those budgets at an acceptable level.”

Sandoval said in a statement the state economy is too fragile to consider higher taxes: “We must, however, realize that while today’s news is welcome, our state’s economy is still fragile. As the Legislature continues to close budgets, it is of the utmost importance to maintain our business-friendly climate to help foster job growth and put our fellow Nevadans back to work.”

The Economic Forum, a panel of private-sector fiscal experts, raised the outlook for most of the state’s tax revenues after an all-day hearing, with the notable exception of gaming. When all was said and done, the general fund will see just under $218 million in new revenue for the next two years.

Because the panel upped the projection for the state share of the sales tax, the schools share of the tax will also benefit by about $113 million. With a reduction due to property tax calculations, the total new funding is $274 million available to Sandoval and lawmakers as they work to finalize a budget for the two fiscal years beginning July 1.

Sandoval said he wants all of the new funding to go to the public education budget.

Democrats in the Legislature say that the additional revenue is inadequate to fund necessary services for the next two years, leaving Sandoval and Republican lawmakers at odds with their Democrat counterparts.

Democrats do not have the votes, however, to raise taxes without support from Republican lawmakers. It requires a two-thirds vote to raise taxes and to override a veto from the governor.

Sandoval will address the state on television at 6 p.m. tomorrow to make the case for support of his budget with the enhanced revenues. Sandoval has vowed to veto any funding plan that requires new taxes or fees.

Complicating the budget dispute is the time element. The Legislature must adjourn its 120-day session by June 6.

Democrats will soon have to introduce a tax plan in order to fully fund the K-12 budget they will propose tomorrow.

Even with today’s revised projections, the gap between what Democrats want and what the governor proposes is about $1 billion just for the K-12 budget.

Horsford said the first order of business is to finalize the budget and determine what level of new spending is required, but the clock is ticking on a revenue plan. If Democrats can muster support for a tax increase, any such measure would have to be passed by the end of the month in order to have time to override a Sandoval veto.

Audio clips:

Assemblywoman Debbie Smith says the public education budget will be finalized at an acceptable level:

CARSON CITY – Gov. Brian Sandoval said today the Legislature should take up the policy initiatives he has proposed in his budget and State of the State address based on their own merits, and not be used in trade for negotiations on fee or tax increases.

“I am hopeful the Legislature will consider all legislation based on its merits,” he said. “There are education issues, there is economic development. As I said I think it is important and beneficial to the people of Nevada that each of these issues be considered on their own merits and not be traded.”

Sandoval, who reiterated comments he made at a speech in Las Vegas last week, said he will not budge on his position of opposing any tax or fee increases to balance his $5.8 billion general fund spending plan. This includes proposals heard by lawmakers last week to hike liquor and cigarette taxes.

Sandoval said he understands the arguments some lawmakers are making for raising “sin” taxes to generate more revenue for the budget, but that he will not support any such efforts.

Sandoval’s comments remained unchanged from those made in a speech to the conservative Keystone Corporation when he said taxes would not be traded for any other legislative objectives.

He said today no Republican lawmakers have come to him and asked that there be some discussion of fee and tax increases in exchange for agreement with Democrats on reforms to Nevada’s collective bargaining law, or to the public pension system, or other areas of concern to the GOP and some business groups.

Some Republican lawmakers would have to join with Democrats if tax increases were to be part of the 2011-13 budget. Democrats do not have the two-thirds majority needed to raise taxes or override a Sandoval veto.

Sandoval’s policy proposals are getting their day in the Legislature.

The Senate Legislative Operations and Elections Committee today will take up some proposed reforms to the state’s collective bargain law, as well as consider a constitutional amendment that would allow for the creation of a voucher school program for Nevada children to attend private schools, including religious schools. These are both issues Sandoval and some Republican lawmakers are supporting.

On Monday, some of Sandoval’s reforms for public education, including the elimination of social promotion of pupils, were also heard by lawmakers.

Sandoval said he is “cautiously optimistic” that the Economic Forum will on May 2 increase its revenue estimate for the budget. If it does so, Sandoval said he would like any additional tax dollars to go to public education.

Sandoval also said he is confused by the decision made by the Board of Regents on Friday to put the possibility of campus closures back on the table as a way to balance the Nevada System of Higher Education budget.

“Well I’m confused because the Board of Regents first indicated they weren’t going to close any campuses, and then at the meeting last Friday they switched course,” he said. “That is a decision that is within the purview of the Board of Regents but I don’t understand why they took one policy decision and then have taken another.”

Audio clips:

Gov. Brian Sandoval says his policy proposals deserve to be considered on their own merits:

(Updated at 5:42 p.m. on 12-1-10 with comments from Gov.-elect Brian Sandoval)

CARSON CITY – A panel of private sector fiscal experts today projected the Nevada state general fund will have about $5.3 billion in tax revenues to spend on government services for the next two years.

The Nevada Economic Forum spent the day making projections for gaming, sales, business and other major tax revenues for use by Gov.-elect Brian Sandoval and the Legislature in crafting a balanced budget for the two years beginning July 1, 2011.

The revenue forecast, which can be modified a final time by the five-member panel in May next year, must be used by state officials in creating a balanced budget.

The panel projected modest growth for gaming and sales tax revenues because the state continues to suffer from the effects of an ongoing recession. The revenue is about $1.1 billion lower than the current budget.

It is also about $3 billion lower than the agency funding requests submitted earlier this year. Nearly $500 million of this total can be eliminated if the Legislature votes to continue a one-day-a-month unpaid employee furlough program and salary freezes.

Sandoval has said repeatedly he will not raise taxes and fees to balance the budget.

In a statement released after the forum concluded its work, Sandoval said the panel’s projections will require state government to make about $1.2 billion in spending reductions in the upcoming two-year budget.

“While the Economic Forum projection is an improvement over what some have predicted, it plainly indicates that many difficult choices are still ahead,” he said. “State spending cannot get in the way of economic growth by imposing new taxes.

“I recognize there will be challenging decisions ahead and I pledge to continue to work hard every day,” Sandoval said.

Sandoval will be sworn in as Nevada’s newest governor early next month.

Members of the panel cited the state’s difficult job situation and the lagging housing market as reasons for their projections of modest revenue growth.

The panel rejected a rosier economic outlook presented by Dan White, an economist with Moody’s Analytics.

The panel did hear some modest good news, that Nevada’s first in the nation unemployment rate may finally have hit bottom.

Bill Anderson, chief economist for the Department of Employment, Training and Rehabilitation, said, “it looks like the worst is behind us.” Evidence of stability is emerging in the job market, but the best the state can hope for over the next two years is no further weakening, he said.

There is no evidence of any catalyst that would cause noticeable job growth, Anderson said.

Nevada will not get back to pre-recession levels of employment anytime soon, he said.

In addition to the weak job market, Nevada’s housing market is not expected to recover anytime soon. The state leads the nation in foreclosures and until the surplus properties are sold, the residential construction market will not recover.

John Restrepo, chairman of the forum, said the panel was concerned about sales tax projections in particular because of uncertainty over consumer behavior and spending patterns as a result of the recession.

The panel forecasted only modest growth in sales taxes, one of the major revenue sources for the state budget. The panel is projecting only a 1.2 percent increase in the revenue in fiscal year 2011-12, and a 3.2 percent increase in 2012-13.

Gaming revenues are projected to grow by 2.7 percent and 3.3 percent in the two years of the budget.

A big decrease is forecasted for the modified business tax because an increase in the rate for large businesses will sunset on June 30, 2011. The increase was approved by a majority of the 2009 Legislature to balance the current budget over the objections of outgoing Gov. Jim Gibbons.

The forum based its projection on the tax levy returning to pre-2009 rates. As a result, the business tax will bring in an estimated $204 million in the first year of the new budget, down from the $351 million projected for the current year.

The state general fund will also lose revenue from room taxes used by the 2009 Legislature to balance the current budget. About $104 million is coming into the general fund from the tax this year, but it is not available for the coming two-year budget.

The five-member forum of private sector financial experts, called together by Gibbons to get its take on the depth of the state’s budget woes, radically lowered its tax revenue estimates for this fiscal year and next.

The result is two years of tax revenues that are 9.2 percent lower than originally projected by the forum last year after $776.3 million in tax increases approved by the 2009 Legislature are factored in. The budget created less than eight months ago using a $6.3 billion revenue estimate will have to see major reductions to come back into balance at a level of $5.7 billion.

The forum heard doom and gloom scenarios – from continued high unemployment, lower gaming revenues and a lagging economic recovery – for much of the day before finally making its projections on 10 major revenue sources.

Other smaller revenue sources will be re-projected by legislative staff, which could affect the final number to a small degree. Required public school funding could add to the total as well since the state is required to make up any shortfalls and much of the public education funding comes from sales taxes, which were significantly reduced in the new forum projections.

Now that the forum’s work is done, the tough job of making the needed cuts gets under way.

A special session is expected to be called by Gibbons for some time in February.

State Budget Director Andrew Clinger said meetings with agency chiefs are scheduled for all of next week to begin the process of deciding what can be cut.

“We will begin making some decisions on what cuts we can accept and those that are not palatable,” he said. “The cuts won’t be across-the-board. Absolutely some agencies will take a greater hit than others.”

When the program cuts are finalized, then Gibbons will look at other alternatives for closing the remainder of the gap, including the possibility of further pay reductions for state employees, Clinger said. No budget cut decisions have yet been finalized, he said.

Gibbons said Thursday he believes a special session of the Legislature is inevitable to deal with the budget cuts. An announcement is expected soon now that the forum estimates are complete.

Gibbons said the session is needed to fix the budget problems created by the Democrat-controlled Legislature, a characterization rejected by Democrat lawmakers.

“I believe the Democrat-controlled Legislature is partly responsible for many of the economic problems our state is facing, but unfortunately, the only way to correct some of their mistakes is to call them together in a special session,” Gibbons said. “All of our economic indicators are pointing toward the need for a special session of the Nevada Legislature.”

Gibbons, who is running for re-election but facing stiff opposition in the GOP primary, blamed legislative Democrats for the current fiscal crisis facing Nevada.

“The Democrat-controlled Legislature raised taxes and increased spending, while I stood by my promise to the voters by vetoing their higher taxes and spending,” he said. “But they wouldn’t listen and now we have to endure the consequences of their actions.”

Gibbons said that during the last legislative session state legislators raised government spending by $1 billion.

“They also raised the payroll and sales taxes, leading to additional layoffs and placing a greater financial burden on Nevada families,” he said. “Today the recession continues and Nevada’s unemployment rate ranks second in the nation.”

Assemblywoman Sheila Leslie, D-Reno, said Gibbons’ comments are designed for campaign purposes and don’t serve to resolve the serious budget problems facing the state.

“The governor is throwing another one of his temper tantrums,” Leslie said. “I’m sure voters know the facts. The entire country is in economic turmoil.”

The modest tax increase approved by a bi-partisan vote in the Legislature is not to blame for the state’s woes, she said.

“It is more complex than that, and the governor knows that as well,” Leslie said. “He is striving for political relevancy by pointing the finger at the opposition party.”

In comments made Thursday on theNevada Newsmakers program, Assembly Speaker Barbara Buckley, D-Las Vegas, said recent budget meetings with Gibbons have not been fruitful.

“What we hear from the governor in these meetings is, basically, “I’m going to announce a plan in my press conference in 30 minutes,” Buckley said. “With one recent legislative leadership meeting, he scheduled it after his announcement. This is not the collaborative approach we need.”

CARSON CITY – The Nevada Economic Forum will meet Jan. 22 to provide its analysis of state general fund revenue collections for the remainder of the two-year budget to Gov. Jim Gibbons and the Legislature.

Gibbons asked the panel, made up of five private citizens with fiscal expertise charged with projecting tax revenues during legislative sessions, to meet initially by Jan. 19 to update its state tax revenue projections. That deadline was extended to Jan. 22. The panel will make projections for the major revenue sources, from sales and gaming to the insurance premium tax.

Gibbons has said he wants input from the panel before deciding when and if to call a special session to deal with a state general fund budget shortfall that is currently $67 million.

Tomorrow is the deadline for state agency chiefs to submit budget cutting scenarios reflecting what reductions of 6 percent, 8 percent and 10 percent would mean to the programs and services they provide.

Budget reduction plans reflecting cuts of 1.4 percent and 3 percent were already provided to Gibbons last month. The newer, higher level of cuts reflect concerns that the state’s general fund revenue collections will not recover as expected when the Legislature approved a balanced budget in June.

In addition to the lower than projected tax revenue collections, the state Medicaid budget is expected to see a deficit of $55 million by the end of the two-year budget on June 30, 2011, due to unexpected caseload growth.

Gibbons said the purpose of providing him with the different budget cutting scenarios is to begin to develop a proposed list of cuts that would do the least harm to essential programs and services.

“What I’m asking them to do is prioritize everything so we can look at the least important, the least impactful thing that each agency does, and we’ll start looking at the bottom and working our way up,” he said.

Any cuts required as part of a plan to balance the state budget could be implemented as soon as March 1 for this fiscal year, and for the entirety of the 2010-2011 fiscal year that begins July 1.

Gibbons has asked state employees for their advice on budget cuts, and he has had one meeting with lawmakers to seek their input as well. More meetings with lawmakers are expected before a decision to call a special session is made.

Gibbons has said everything is on the table for discussion, including the potential of state employee layoffs.

Only the governor can call the Legislature into special session.

Whether the budget shortfall will require a special session has not been determined. But lawmakers are expected to be called to the capital by June to take action on a separate issue, a provision in state law that is keeping the state from applying for federal “Race to the Top” funds to improve schools.

Gibbons said he will seek a special session to repeal the law, which prohibits the use of student achievement data from being used to evaluate teachers.

The law must be changed or repealed by the end of May so the state can apply for as much as $175 million in funding.

CARSON CITY – Gov. Jim Gibbons said today he will ask for advice from a panel of private business financial experts on what the future holds for state revenues before deciding whether to call a special session to balance the budget.

Gibbons said he will issue an executive order calling the Economic Forum together to make its assessment and report back by Jan. 19. At that time, a decision will be made about whether a special session is necessary, he said.

State tax revenues are $53 million short for the first three months of the fiscal year that began July 1.

“We are still weighing options for what actions the state must take with regard to the recession and the revenues that are coming in shorter than expected to the state of Nevada,” he said. “Total revenue is up, that’s called tax increases. But spending is up even more. This cannot continue. The state must live within its means.”

Layoffs and all other options are on the table as agencies prepare contingency plans for budget cuts, Gibbons said. Those plans, showing what a 1.4 percent and 3 percent cut would mean to programs and services, are due to Gibbons by Dec. 15.

The five member Economic Forum, with three appointees from the governor and one each from the Assembly and Senate, projects tax revenues every two years that the Legislature must use to balance the state budget.

Gibbons appointed Matt Maddox, chief financial officer of Wynn Resorts, to serve as a new member of the panel. He replaces Cathy Santoro, an MGM Mirage executive who resigned from the panel after relocating out of state.

Gibbons said it is unusual to call the panel in to weigh in on the budget issues in-between sessions, and that his decision to do so was not universally supported by lawmakers during a budget discussion held Monday.

“Because this is an unprecedented time in Nevada, it calls for unprecedented action,” he said. “We think it is prudent to call them together to gives us that Economic Forum forecast.”

Gibbons said a $160 million line of credit approved by the 2009 Legislature to balance the two-year budget will be the last option he uses to solve the immediate budget shortfall. The money is already part of the budget, so using it now just means an additional shortfall that must be addressed later on, he said.

Dan Klaich, chancellor of the Nevada System of Higher Education, in a letter sent to Gibbons today, urged consideration for using the line of credit now to postpone budget cuts. This would give the state more time to see if tax revenues start to turn around, he said.

“Further budget cuts at this time should be a last resort,” Klaich said.

It would be a severe disruption to accomplish mid-year budget cuts in higher education, he said.

“Contracts are executed for the year, class schedules are published, registration is largely complete and we have accepted students’ fees,” Klaich said.

And because the Board of Regents would have to act first, Klaich said the higher education system will not be able to meet the Dec. 15 deadline to provide proposed budget cuts as requested. Klaich offered to meet with Gibbons to discuss alternatives to budget cuts to balance the budget.

Gibbons said he would prefer not to call a special session to deal with the budget. But Gibbons said he will call a special session by June 2010 to change a state law to allow Nevada to compete for federal funds to improve schools.

The state cannot now apply for the “Race to the Top” funds because of a law that says student performance cannot be used to evaluate teachers. The law was approved in a 2003 special session.

“I do not want to call two special sessions,” Gibbons said. “I want to make sure whatever we do, it qualifies Nevada for the Race to the Top funding.”